ACTIVITIES OF LEGAL DEPARTMENT

Mr. PARKER. Mr. Chairman, I should like to say a word about the legal expense so far as the Fleet Corporation is concerned. The action of the Shipping Board on October 1, referred to by the president of the Fleet Corporation, simply changed the control of the personnel. Before that time the personnel was worked out through the president of the Fleet Corporation. If there were to be any changes in the personnel, either by way of addition or separation or by increases of salary or promotion, and that sort of thing, that was passed up to the Shipping Board' through the president of the Fleet Corporation.

The effect of the October 1 resolution was to make the conduit for those things to the Shipping Board through the commissioner in charge of the bureau of law. That is the only change that was made.

Now, with reference to the personnel of the legal department, certainly the Fleet Corporation requires legal services with reference to all litigation that arises or has arisen out of the operation of ships by the Fleet Corporation. That includes all of the admiralty business and includes all the P. & I. business and includes all of the insurance business.

Mr. WOOD. If there is any legal liability against the Shipping Board proper, which is a Government corporation, how is that determined; by the Court of Claims?

Mr. PARKER. The liabilities arising out of construction in the war period, of course, are not liabilities primarily of the Fleet Corporation at all, because the Fleet Corporation was an agency proposition only; but in addition to the admiralty litigation, in addition to the P. & I. litigation, the legal department also handles all the legal work in connection with the operation of ships by the Fleet Corporation.

For instance, take the sale of ships. Take the matter of the handling of the property of the Government through the Fleet Corporation, a great deal of legal work has been done with that.

All these contracts have to be drawn. Take, for instance, the purchase of supplies. Contracts have to be drawn with reference to that. The legal department is called in on all of that business.

Take the case of the sale of a ship. Contracts have to be drawn. for that. They are executed for the Fleet Corporation, but none the less the legal department has to have a personnel to do that business.

EXECUTION OF CONTRACTS FOR SALE OF SHIPS

Mr. WOOD. If you sell a line of ships, the people who negotiate the conditions of sale are the Shipping Board. When it comes to executing the contract, the Fleet Corporation does that. All that you are doing is simply signing on the dotted line. Why should not that be entirely the business either of the Shipping Board or entirely the business of the Emergency Fleet Corporation? Mr. PARKER. It is the business really of both.

Mr. WOOD. I understand it is, but you have not sold any ships the contracts for the sale of which the Shipping Board has ever signed, have you?

Mr. PARKER. Yes; there have been a number of contracts that the Shipping Board has actually signed, but as a rule, they do not do that.

Mr. WOOD. Take the case of the sale of the Dollar Line. The Shipping Board did not sign those contracts. Those were signed by the chairman of the Emergency Fleet Corporation.

Mr. PARKER. The last contract with the Oriental Line, I think, was signed by Chairman O'Connor.

Mr. WOOD. How do you differentiate between the contract of sale of one line which is signed by the chairman of the Shipping Board, and the contract of sale of another line which is signed by the president of the Fleet Corporation?

Mr. PARKER. The Shipping Board, as a rule, turns it over to the Fleet Corporation to actually handle the papers. But they require the Fleet Corporation officials not only to conduct the preliminary negotiations, but after the resolution is passed by the Shipping Board, the Fleet Corporation officials have to check up through the legal department on the legal end of it, through the sales department on the practical end of it, and through the president of the Fleet Corporation on the wisdom of making the deal.

Mr. Wood. You have not yet answered my question. Why, if the sale of the Oriental Line was executed by the Shipping Board, should the sale of some other line be executed by the Emergency Fleet Corporation?

Mr. PARKER. I will answer that question exactly, Mr. Wood. You recollect that the president of the Emergency Fleet Corporation was Captain Crowley. You recollect that there was considerable criticism in the Shipping Board over the fact that Captain Crowley took a view which was adverse to the Shipping Board in respect to the wisdom of making that deal. There was a mistake made in the preparation of the contract which Captain Crowley picked up. I suppose, for some personal reason, the Shipping Board desired that that particular contract should be signed by a commissioner of the Shipping Board rather than by Captain Crowley. That is the whole explanation of it.

Mr. WOOD. He would not sign it, that was one reason.

Mr. PARKER. Yes, sir; he would have signed it.

Mr. WOOD. He did not sign it?

Mr. PARKER. He did not sign it because he was not asked to sign it. The resolution said that it might be signed either by the proper officer of the Shipping Board or of the Emergency Fleet Corporation.

Mr. WOOD. Then you determine who shall execute it by resolution? Mr. PARKER. Mr. Jenkins says that he signed it. My recollection was that the chairman signed it.

Mr. WOOD. My recollection is that he did not sign it.

Mr. JENKINS. He did not sign the first one; he signed the final one. Mr. Wood. That might be the case.

It seems as though the more light we try to get on this matter the further in the dark we get.

ORGANIZATION

UNITED STATES LINES DEPARTMENT

Mr. WOOD. I wanted to ask you some questions about your personnel and I might as well do that now while I have this chart before I suppose you have heads for these different divisions, such as

me.

United States Lines, comptroller's department, finance department, travel department, executive department, etc.?

General DALTON. Yes, sir.

Mr. WOOD. It would be interesting to know who these heads are and how much they are paid. I remember that two years ago one of the fights that we had to make on the floor of the House was with reference to the maintenance of salaries sufficiently compensating for men whose ability warrants their holding these positions. Who is at the head of the United States Lines Department?

General DALTON. The acting manager, Mr. David A. Burke. Mr. WOOD. Last year we made an appropriation to pay for the salary of the manager of the United States Lines whose name, I believe was Rossbottom. I understand that that was the maximum salary. It seems that Mr. Rossbottom is out and the salary that was appropriated has been diverted to somebody else, and that this man is not receiving the salary that was appropriated for that purpose. What do you know about that?

General DALTON. My understanding is that the salaries were not appropriated definitely for positions. There was one salary at $18,000, which was for the president. That is, $18,000 was presumed to go to the president.

There was one $18,000 salary, three $15,000 salaries, one $12,000 salary; those were in excess of the statutory limitation on salaries of $10,000. The allocation of these salaries was left entirely to the discretion of the Shipping Board. When I assumed the presidency of the Fleet Corporation, I found that the vice president, who is next in authority and power to the president, was receiving $12,000. I found the manager of the United States Lines, his subordinate, was receiving $15,000. I found that the general counsel was receiving $15,000, that the director for Europe was receiving $15,000.

That took care of the three $15,000 positions.

I made a change in the vice presidency and I made a change in the managership of the United States Lines. The assistant manager of the United States Lines is now acting manager until I decide upon a permanent appointment.

I recommended to the Shipping Board that the vice president receive one of the $15,000 salaries, which I believe was the right thing to do. That left the director at London at a salary of $15,000, and the general counsel $15,000, and left the $12,000 position vacant. That position has been vacant and I have submitted a recommendation to the Shipping Board for appointment January 1st of a manager of the United States Lines at $12,000, the present acting manager to be promoted to manager from the position of assistant

manager.

There were two reasons why I had not filled that position. One was the uncertain status of the United States Lines and the second was that it was a very important position and I wanted to try the man out before I made the appointment.

Mr. WOOD. Mr. Burk is the manager of the United States Lines and his salary is $12,000. You say you have not filled the $12,000 position?

General DALTON. I have not utilized the $12,000 position, because I left him as acting manager in his old position as assistant manager. Mr. WOOD. Was that what he was getting?,

General DALTON. $10,000.

Mr. WOOD. And he is getting $12,000 now?

General DALTON. He will get $12,000 on the 1st of January if the Shipping Board approves my recommendation.

Mr. WOOD. He is getting only $10,000 now?

General DALTON. Yes, sir.

COMPTROLLER'S DEPARTMENT

Mr. WOOD. Who is at the head of the comptroller's department? General DALTON. Mr. Morrison, who is here.

mum salary under the statutory limitation.

FINANCE DEPARTMENT

That is the maxi

Mr. WOOD. Who is at the head of the financial department?
General DALTON. Mr. Schmidt who is also the treasurer.

TRAFFIC DEPARTMENT

Mr. Wood. Who is at the head of your traffic department?
General DALTON. Mr. F. G. Frieser.

Mr. WOOD. What is his salary?

General DALTON. $10,000.

Mr. WOOD. The office of traffic manager is a pretty important one, is it not?

General DALTON. Yes, sir; that salary is too low for that position. Mr. WOOD. What experience has he had as a traffic manager to qualify him to be traffic manager of this concern? Was he ever traffic manager for any other shipping concern? General DALTON. Here is a little summary of his experience:

From 1906 to 1911, foreign freight agent for Gould Railway System Lines; in 1911 joined Canadian Pacific Railway Co., first as export freight agent in Montreal and later foreign freight agent in New York in charge of all traffic of that company between the United States and foreign ports. August 9, 1921, appointed to Fleet Corporation in charge of European trades division, traffic department; in July, 1923, appointed traffic manager, and on January 2, 1925, appointed director of traffic.

VICE PRESIDENT OF FLEET CORPORATION

Mr. WOOD. Who is the vice president?

General DALTON. Mr. Philbin; J. Harry Philbin.

Mr. WOOD. Did he ever have any experience as a shipping man before he came to this position?

General DALTON. His record here briefly is as follows:

Manager, ship sales department (that is at the time that I came to the corporation).

Prior to appointment to the Emergency Fleet Corporation held various positions with various industrial concerns ranging from purchasing agent and accountant to general manager.

Mr. WOOD. Does that qualify him to be vice president of a shipping corporation of this size?

General DALTON. Mr. Wood, I was of the opinion that he was the best available man for the appointment as vice president. He has been with the Shipping Board since 1919, when he was appointed as

special assistant to Commissioner Scott. He had charge of the sales department as assistant manager. In 1920 he was promoted to manager of the ship sales department and in charge of that department until appointed vice president July 18, 1926.

Mr. WOOD. Was he out of the service for a while?

General DALTON. Not since 1919.

Mr. Wood. Who is the head of the executive department?
General DALTON. The vice president.

Mr. WOOD. That is Mr. Philbin?

General DALTON. Yes, sir.

Mr. WOOD. And the fleet control department?
General DALTON. He is also at the head of that.

OPERATIONS DEPARTMENT

Mr. WOOD. And the operations department?
General DALTON. Mr. James A. Wilson.

Mr. WOOD. Who is he?

General DALTON. His record is as follows:.

For about 10 years engaged as assistant and chief engineer on freight and passenger vessels, later, insurance surveyor, inspector of boilers with United States Steamboat-Inspection Service. Served during the war as lieutenant commander in naval overseas transportation service. After the war engaged in the operation of small vessels for own account; ship repair business; and with private operators. Appointed to Fleet Corporation December 18, 1925, as director of operations; resigned on June 25, 1926; reappointed July 16, 1926. Mr. WOOD. He was out about a month?

General DALTON. Yes, sir.

Mr. WOOD. He was appointed by Captain Crowley?

General DALTON. He was originally appointed by Captain Crowley, then resigned, and I reappointed him.

Mr. WOOD. Wasn't he discharged by Captain Crowley?

General DALTON. I do not know.

Mr. WOOD. We understand that his resignation was requested. General DALTON. I was not interested in that.

Mr. WOOD. I understand; how is he getting along now?

General DALTON. I am personally of the opinion that he is filling the position very well. He is a man who I think knows his business. He knows vessels and vessel repair. He is a hard worker, and another, thing, I believe that he is absolutely loyal to me and my administration.

SUPPLIES DEPARTMENT

Mr. WOOD. Who is at the head of the supplies department?
General DALTON. Mr. H. Y. Saint.

Mr. WOOD. Who is he?

General DALTON. His record is as follows:

After graduating from Ann Arbor, entered general counsel's office of ScrippsMcRae newspaper interests in Cincinnati; afterwards established and managed properties for them; later engaged in real estate, mining and general promotional business; organized the foreign trade and shipping department of the Seattle Chamber of Commerce. Joined the Fleet Corporation May 21, 1919, to organize an export coal department and handle vessels in that trade; later handled the stevedoring and terminals divisions of operations, on August 1, 1926, appointed director of supplies.

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